Mergers and Acquisitions

Date: 2017-06-16

Type of information: Company acquisition

Acquired company: Actelion (Switzerland)

Acquiring company: Johnson&Johnson (J&J) (USA - NJ)

Amount: $30 billion

Terms:

• On June 16, 2017, Johnson & Johnson announced the completion of the acquisition of Actelion for a total purchase price of approximately $30 billion in cash. The acquisition was completed through an all-cash public tender offer by Johnson & Johnson’s Swiss subsidiary, Janssen Holding GmbH, to acquire all publicly held shares of Actelion for $280 per share, payable in U.S. dollars. Actelion will now become part of the Janssen Pharmaceutical Companies of Johnson & Johnson.

In connection with the completion of the public tender offer, Actelion has spun off its drug discovery operations and early-stage clinical development assets into a newly created Swiss biopharmaceutical company, Idorsia. As previously announced, a subsidiary of Johnson & Johnson will initially hold 9.9 percent of the shares of Idorsia and, subject to certain limitations, will have the right to an additional 22.1 percent of Idorsia’s outstanding equity through a convertible note.

A subsidiary of Johnson & Johnson also has an option on ACT-132577 (aprocitentan), a compound in development for resistant hypertension for which the phase 2 clinical results were recently announced.

Johnson & Johnson expects the transaction to add approximately $1.3 billion in sales for 2017 and be accretive to 2017 adjusted earnings per share by approximately $0.07.

• On June 14, 2017, Actelion announced changes to its executive team that will take effect upon the settlement of the public tender offer by J&J's Swiss subsidiary, Janssen Holding GmbH, for all publicly held shares of Actelion which is expected to occur on 16 June 2017. As previously announced, Jane Griffiths will assume the position as Actelion's Global Head and Otto Schwarz will retire from his position as Chief Operating Officer upon Settlement.

Jean-Paul Clozel, CEO, André C. Muller, CFO, and Guy Braunstein, Head of Global Clinical Development, will leave Actelion's executive committee, which will be dissolved as of Settlement, and move to Idorsia Ltd on 16 June 2017. Jane Griffiths will be supported in her top executive role at Actelion by a newly formed leadership team. Nicholas Franco, who has been the Chief Business Development Officer, will be a member of this leadership team going forward.

• On June 9, 2017, Johnson & Johnson announced that, with the receipt of approval of the proposed acquisition of Actelion from the European Commission (EC), all regulatory approvals required to complete the transaction have been received. Johnson & Johnson expects the settlement of the all-cash public tender offer by its Swiss subsidiary, Janssen Holding GmbH, to acquire all publicly held shares of Actelion Ltd for $280 per share, payable in U.S. dollars, on June 16, 2017.

• On May 15, 2017, Actelion announced changes to its executive team that would only take effect upon closing of the transaction with Johnson & Johnson expected towards the end of the second quarter 2017. J&J has appointed Jane Griffiths as the Global Head of Actelion, to take effect upon closing of the transaction. Dr. Griffiths has served as the Company Group Chairman, Janssen EMEA, since January 2011. Prior to leading Janssen EMEA, she was responsible for the EMEA Market Access unit. She has also served as International Vice President for Janssen-Cilag Northern Europe; Vice President, EMEA Biopharmaceuticals; and Managing Director, Ortho Biotech UK & Ireland.

Otto Schwarz, PhD, will retire from his position as Chief Operating Officer, upon close of the transaction. He will work closely with Jane Griffiths as senior advisor for the 12 months following the completion of the transaction on the smooth integration of Actelion into Janssen/Johnson & Johnson and the seamless execution of Actelion's commercial strategies to maintain the strong momentum.

• On April 27, 2017, Actelion announced that Janssen Holding GmbH published the definitive notice of the end result of its all-cash public tender offer in Switzerland to acquire all publicly held shares of Actelion Ltd for $280 per share, payable in US dollars, per the offer prospectus of February 16, 2017. At the expiration of the additional acceptance period on April 21, 2017, 16:00 hrs CEST, a total of 99,303,760 Actelion shares were tendered, corresponding to 92.51% of the 107,339,642 Actelion shares covered by the tender offer. Including the Actelion shares tendered, Janssen and Actelion, a person acting in concert with Janssen, held as of the end of the additional acceptance period 100,665,760 Actelion shares, corresponding to 92.62% of the voting rights and the share capital of Actelion (including the Actelion shares issued until the end of the additional acceptance period out of Actelion's conditional capital due to the exercise of awards under Actelion's equity plans). According to SIX Swiss Exchange's media release of April 24, 2017, Actelion will be excluded from the SMI® blue-chip index with effect from May 3, 2017.

• On January 26, 2017, Johnson & Johnson announced that they have entered into a definitive transaction agreement under which Johnson & Johnson will launch an all-cash tender offer in Switzerland to acquire all of the outstanding shares of Actelion for $280 per share, payable in U.S. dollars, which equates to CHF 280.08 per share as of January 25, 2017. The transaction, which was unanimously approved by the Boards of Directors of both companies, is expected to be immediately accretive to Johnson & Johnson adjusted earnings per share and accelerate Johnson & Johnson revenue and earnings growth rates. Johnson & Johnson will fund the transaction with cash held outside the United States.

Johnson & Johnson expects to retain Actelion’s presence in Switzerland and also leverage its complementary capabilities in shaping medical paradigms.

The transaction is expected to close by the end of the second quarter of 2017. It is conditioned upon:

- At least 67% of all Actelion shares that are issued and outstanding at the end of the offer period, which may be extended, tendering into the offer;

-The approval of the Actelion shareholders of the distribution of the shares of R&D NewCo at the EGM called for this purpose; and

- Further customary offer conditions described in the offer prospectus, including regulatory approvals.

Actelion’s Board of Directors unanimously recommends that Actelion shareholders tender their shares into the offer and vote in favor of the distribution of shares at the EGM.

Actelion has established a leading franchise of differentiated, innovative products for pulmonary arterial hypertension (PAH) that is highly complementary to the existing portfolio of the Janssen Pharmaceutical Companies of Johnson & Johnson. This transaction aligns with Janssen Pharmaceuticals’ Transformational Medical Innovation Strategy: Actelion’s PAH franchise, including differentiated, innovative medicines Opsumit®, Uptravi®, Tracleer®, Veletri® and Ventavis®, expands Janssen Pharmaceuticals’ portfolio in its attractive and complementary cardiovascular and metabolic therapeutic area, and provides a leading commercial position in an established area where the science is transformational for patients. Through the proposed transaction, Johnson & Johnson will also acquire Actelion’s other marketed products, including Valchlor® and Zavesca®as well as global rights to ponesimod, an S1P1 receptor modulator in phase 3 development for multiple sclerosis, and cadazolid, a novel antibiotic in phase 3 development for Clostridium difficile-associated diarrhea.